7-Eleven Aims to Become a Wine Destination

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FILED OCTOBER 18, 2013

Dear Client:

7-Eleven has long been one of the most active convenience store chains in the wine business. The chain's wine selection has steadily grown from about a dozen different wines to between 24 and 40 varieties from around the world. The average price of a bottle of wine sold at 7-Eleven is between $6 and $7, but today the company has announced it is making a move on premium wines.

700 of the chain's 10,200 North American stores are adding Jackson Family Wines' La Crema chardonnay, Louis Martini cabernet sauvignon, Constellation Brands' Kim Crawford sauvignon blanc and Wild Horse pinot noir to their shelves. Available in about 16 US states, all of the new wines carry a suggested retail price of $20 or less.

7-Eleven attributes the decision to a shift in consumer preferences. The company believes wine drinkers' tastes have grown more sophisticated compared to the "inexpensive, fruit-flavored" wines of the past. "We want to create a mini-wine shop within some of our stores that have shown strong demand," says Alan Beach, a 7-Eleven vp of merchandising. "Regardless of their budget or taste preferences, our guests should be able to find a wine to meet their expectations."

Our most recent IRI data confirms 7-Eleven's assertion that consumers are trading up at c-stores. Year-to-date ending October 6, wines priced $11-$15 increased sales the most at nearly 40%. Though wines priced $8-$12 were not far behind at 37%, followed by wines priced $15-$20, which were up 30%.

Of the 16 states where 7-Eleven is introducing the premium wines, the company is focusing its efforts on: the greater San Francisco area, greater L.A., Chicago and some of its suburbs, northern Virginia, the greater Dallas-Fort Worth area, neighborhoods in the greater Orlando, Tampa/St. Petersburg and West Palm Beach areas, along with Richmond and southeastern Virginia, Margaret Chabris, 7-Eleven's director of corporate communications tells WSD. Margaret added that they have identified 300 stores where they plan to launched luxury wines priced between $20-$55 dollars for the November-December holiday season.

GETTING RESULTS: One of the 7-Elevens to introduce the premium wines in Northern Virginia has already shown an increase in sales. "Typically, people might head to the grocery store to find a new wine, but our guests have been pleasantly surprised to learn what a broad selection of great quality wines their neighborhood 7-Eleven store has ... and at good prices," says Greg Manzer, 7-Eleven's market manager for 110 stores in northern Virginia. "We want to be a wine destination , and these new, ultra-premium wines are giving local wine-lovers another reason to consider 7-Eleven when looking for a good bottle to enjoy."

It is likely that as the premium wine selection grows at 7-Eleven some operators may be forced to phase out wines that don't perform. "We want to introduce the fine wines in stores where we believe customers want them," says Margaret. "Each store operator will then study sales data to know which are most popular in their store and incorporate the top sellers into the usual section where they sell wine.

C-STORES TRENDS: Within 7-Eleven, consumers are moving more toward varietal wines, rather than "generic blended wines categorized generally as red, white and rose," says the company. Moreover, varietals have also become more important than growing area.

7-Eleven also cites Wine Market Council data in an assertion that drinking wine during the week nights with dinner has become more commonplace. "Even in a tight economy, people are splurging on higher quality wine or craft beer to treat themselves," says Alan. "We have seen strong customer response to our offers of premium and super-premium wines in our stores."

The Dallas-based c-store chain says it expect to add premium and super-premium wines to more of its stores as demand increases. "In just a short time, momentum is already growing. And, now we are heading into the holiday season, the heaviest wine-sales time of year. 7-Eleven is ready with just the right bottle of wine - or two - for any holiday occasion," says Alan.

BOTTLED WINE IMPORTS ACCELERATE IN Q3

In 2012 bottled imports to the US decreased, while bulk wine shipments increased. This is the king of trend we like as bottled imports are generally higher priced than bulk wine and compete head-to-head with American wine brands. However, in the second quarter of 2012 US import trends began to shift in the other direction, according to the Rabobank Wine Quarterly Report for Q3. These trends continued in the third quarter with bottled imports up 6% and bulk imports down 22%.

Italian imports slowed a bit from 8% year-to-date in March to 3% year-to-date in July. French bottled wine imports were up 14% and total wine imports were up 6%. Both Australia and Spain saw growth in bottled wine imports of 6% and 13%, however, the significant decline in US bulk imports offset bottle growth for the two countries, writes Steve Rannekleiv, Rabobank's executive director for food & agribusiness research and advisory.

ON-PREMISE STILL STRUGGLING AT BEGINNING OF Q4

GuestMetrics has declared the third quarter the worst performance by bars and restaurants in 2013. Unfortunately, the fourth quarter isn't shaping up to be much better so far. Overall traffic to restaurants and bars was down 1.7% in the third quarter, but down even further to 2.5% for the 4 weeks to October 6.

On-premise alcohol volumes were down 3.8% in the third quarter and down 4.1% for the 4 weeks. Beer primarily drug down the alcoholic beverage category, but spirits and wine didn't fare much better. Beer volumes were down 5.2% for the 4 weeks, while wine and spirits were down 2% and 3.5%, respectively.

"Our early analysis of trends by region suggests that some of the particular weakness seen in on-premise during the past few weeks is likely due to the uncertainty relating to the government shutdown, so our hope is that with the recent resolution, some of the traffic and volume trends in on-premise will finally start to turn a corner in the coming weeks," writes Guest Metrics in a release.

WSD BRIEFS:

AMAZON HAS EXTENDED ITS WINE SHIPPING services to New York, Michigan, Arizona, and Louisiana. Including the new addition, Amazon Wine now ships to 20 states and D.C. Also new this holiday season, Amazon wine is offering limited production wines, deals on mixed packs and the opportunity for customers to get holiday wine questions answered directly by wine sellers on Amazon.

COGNAC FERRAND IS RELEASING THE NEWEST addition to its Plantation Rum brand this month. Plantation Original Dark Rum is a blend of double-aged rums retailing for approximately $18 a 750 ml. It will be available nationwide with a special focus in CA, D.C., FL, IL, LA, MA, NJ, NY, TX, VA and WA.

COOPERSTOWN DISTILLERY HAS OPENED ITS doors this week. The New York-based micro-distillery has also released its first three spirits: Beanball Bourbon (srp $45), Fenimore Gin (srp $40) and Glimmerglass Vodka (srp $35). Additionally, for the holidays Cooperstown will release Abner Doubleday "Double Play" vodka with an srp of $50 a 750 ml.

THE CHARMER SUNBELT GROUP (CSG) has promoted Rob Sirota to vp, business development for Proximo Spirits, effective January 2014. "With the expansion of our Proximo relationship, we deem this new role of critical importance," says Greg Baird, CSG coo. Rob brings 18 years of industry experience to the table. His most recent title was alliance general sales manager. He will report directly to Robert Catalani, executive vp, sales and marketing for CSG.

FORMER SAFEWAY VP DOUGLAS J. RATTO has joined BevMo as executive vp, chief merchant. He will be responsible for leading the buying, planning, allocation and distribution teams at BevMo. Douglas has more than 25 years of retail and marketing management experience. Since 2010 he has served as Safeway's senior vp, general manager of alcohol/tobacco, home care/general merchandise & family.

YAO FAMILY WINES, THE WINERY FROM former NBA basketball player Yao Ming, has released its inaugural vintage of Napa Crest 2010 Napa Valley Red Wine. Napa Crest is a red blend composed of cabernet sauvignon, merlot and petit verdot. It will be in select wine shops and restaurants across the US early next year with a suggest retail price of $48.

Until Monday, Emily

"Some folks pay a compliment like they went down in their pocket for it."-- Kin Hubbard

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